growth. this is one. >> people are starting to buy new vehicles so i think aud toe zl zone will be under pressure. >> it is nice goldman is making a deposit into the bank of karma with this upgrade of dell this week. i don't think it is a call investors should case. if you're long, walk away today. it is a great opportunity. >> we'll see you tomorrow. "power lunch" starts now. >> announcer: lace 'em up. halftime is over. the second half of the trading day starts now. back to basics. it is the first trading day of december and traders are focusing on growth and the consumer instead of, believe it ornts, headlines and the fiscal cliff. we'll look at sectors that tend to do best in what is traditionally a good month for the bulls. first interview, david faber is going to join us with the ceo of charter communications. that is thomas rudd ledtledge.

we'll get his take on the economy and the company's growth plan. a cnbc exclusive. would you get a mortgage from that girl? no, from walmart. a lot of people say they would. what's that all about? we're going to run it down later on "power lunch." we start with my partner sue herera in the center of the action downtown at the nyse. >> stocks are slightly lower right now despite those fiscal cliff anxieties. they've been pretty steady throughout the day. the s&p 500 broke above its 50-day moving average, believe it or not. earlier in the day it's backed off a little bit. economic news and new data shows u.s. manufacturing falling to its lowest level in three years. and there is a little nervousness about the president taking to twitter at 2:00 p.m. eastern time to talk about the fiscal cliff negotiations that are going on. but it is the first trading day of the month and some on wall street are getting bullish for year end. it is going to be a december to remember, i predict it. >> i think this is one of the reasons we're holding up so well, because december is the best month of the year and we

roll into january which is also a very good month. let me show you some sectors that do especially well in the month of december. there's major sectors here. this is the best performing sectors in the month of december, averaged over the last ten years. you can see it is a diverse group -- health care, telecom, utilities. a lots of people play dividend at the end of the year. energy and materials a little bit deceptive. for example, energy has only been up a few of the last decembers. it's had a couple of real terrific decembers. i want to note there's only one sector that's averaged down in december for ten years. believe it or not, it is tech which obviously had a terrible 2002 but also had a particularly terrible 2009. you can get some real volatility in the tech sector. >> you really have to look at the last ten years trading performance in some of these before you make a decision. one of the big stories

rolling out throughout the day -- a november to remember for the automakers. carmakers revving up some big sales but some of it was because of super storm sandy. our phil lebeau is behind t wheel in chicago. >> we knew this would be a better than expected november and look at these numbers. generally speaking with a few exceptions, all of the automakers reported better than expected results last month. gm being one of the exceptions, being just a little bit below expectations. what did we see last month? the sales pace is going to come in probably about 15.2 million, first time over 15 million since early '08. we talked about sandy helping sales. there was also the economy. ford talked about that during the conference call today. ford raised its q1 production by 11% to 750,000 vehicles. compare that to the story of general motors. this worries people from today's auto sales results. gm warning it may cut truck production due to inventory build-up. they're at 139-day supplies of

pick-up trucks. some of that is because they built up earlier this year for transition into a new truck. they've been targeting 80 to 85 days truck production. 139 days concerns a number of people. one last thing we want to show you. this is a chart of shares of the adrs of volkswagen. why? volkswagen has passed 500,000 sales in the united states in one year for the first time since 1973. i don't know what you had back in 1973, sue, i'm not commenting on that, but that's a long time ago for volkswagen to pass 500,000 in sales. >> my very first car which i got in 1979 was a volkswagen bug. light blue. stay with us, phil. let's talk more about the auto sector. we'll bring in auto industry expert jim hall, managing director at 2953 analytics. jim, welcome. start first with the impact of sandy. is there one specific automaker that you think will benefit more from the impact of sandy as dealers have to reorder new

cars? >> historically, actually trucks do better. they do better because you've got dealers taking care of inventory and you also have people going out that are in the business of basically doing work with trucks and they'll use this as an excuse to get it. you're looking probably at ford and gm on the truck side taking a lot. gm needs that upswing in trucks lig right now. >> how does this get counted as sales? customers may not have the cars yet but dealers are ordering the cars to try an make up for lost inventory. is that correct? >> basically, yeah. the minute the car or truck gets put on the haul-away, whether a rail head or a truck, that's when it transfers to the dealer. when you get down to it, the car companies don't sell cars to customers. their customer is the dealer and the dealer resells them. when you see sales you aren't seeing registrations. as a result there is a little lag here. >> phil, weigh in on this. what sector do you think is --

do you agree that trucks really are going to see the lion's share? there are a lot of people here on the east coast that need to replenish two or three family cars, minivans, the like. >> that will take some time. we're just starting to see the impact of the rebound from sandy. as far as pick-up trucks, you not only have the sandy effect on the east coast but you've got the housing market recovery, construction firms needing to buy new vehicles. here's something to consider. through the third quarter, pick-up trucks were 10% of sales. they were up to 11.5% in the month of october. i'll be curious to see what they were for the month of november. all of this sets up what many are forecasting which will be a big, big december. always a big month in the year for auto sales particularly in the luxury segment. that's what we'll see in the next month. >> jim, what about ford's commitment to lincoln? they are revitalizing the brand, trying to rebrand it to a younger audience certainly. do you think they'll be successful, and what does that

say about their commitment to that particular car? >> they can be successful with rebranding lincoln but it is a multi-decade commitment to do. that's really tough for car companies to do. the fact that they have to sort of recommit to lincoln tells you that before they weren't committed -- or they were, then it ran out. this is a thing where you got to be in it for the long haul. if you're not there is an argument it may be good money after bad. >> phil? >> agree 1 h00%. we've been hearing about the comeback of lincoln. we're six years in finally seeing them make a commitment to rebranding lincoln. rest of the luxury market has left them in the dust. they have a huge little to climb. >> we will see how they do. thanks, guys. appreciate it. to washington now where with only 28 days until america goes over the fiscal cliff, if you listen to the rhetoric, the politicians have a lot to learn about rising above. both sides pinning the need to blink on the other. it is the "you go first" kind of

debate. our chief washington correspondent john harwood is here with the very latest on the negotiations, such as there are negotiations, job. >> reporter: tyler, people say it is sometimes darkest just before the dawn -- unless it is just before it goes pitch black. it is sometimes hard to tell the difference between a process that's proceeding behind the scenes and one that really is what you see is what you get. i just stepped out of jay carney's white house briefing. he was drawing again a hard line on raising tax rates for people at the top which republicans are resisting. if you want the sunday talk shows, as we show in this little montage here, you could easily come to the conclusion that this thing is stuck. >> only thing standing in the way of that would be refusal by republicans to accept that rates are going to have to go up on the wealthiest americans. i don't really see them doing that. >> i think we're going over the cliff. >> right now i would say we're nowhere. >> reporter: but i still think, tyler, that there are back-channel negotiations going

on. there is the framework outside of a deal and there's a knowledge on both side that they need to get to one. so some of this is theater for the two sides' political bases. i think the underlying conditions for a deal remain in place, though there is an interesting calendar dynamic. remember, if republicans vote for an increase in the top rate for top earners before december 31st, whether it's 39.6% or 37% or 38%, that's a tax increase to republicans before december 31st. but on january 1, that becomes a tax cut vote, tyler, because the current law has those rates going up to 39.6%. so that may be an argument for going over the cliff for a few days, then solving it after that. >> that is what i've increasingly been hearing. if you wait until you go over the cliff, then the republicans can legitimately say we're voting to lower rates from those rates that the president allowed us to experience. let's talk about the president who is going to take to social media this afternoon to talk about the fiscal cliff. what's he going to do? >> reporter: i think he's just

going to engage with the american public. remember, a key element of the strategy that he's had ever since september of 2011 when the grand bargain talks broke out -- broke down and post-election he's made clear this is going to remain an element of his strategy, is campaigning with the public. he made that trip to pennsylvania last week. he's trying to use the public, which polls show agrees with him on some of the key questions like top rate, to put pressure on the congress to move. we'll see how effective that can be. certainly it hasn't been effecti effective heretofore but it is possible it could and the president believes having won the election he's on the high side. >> 2:00 on twitter. john, thanks very much. one of the overhangs for the fiscal cliff for investors is what will happen on dividend tax rates. more and more corporations aren't waiting to find out exactly what happens with more than $22.5 billion worth of special difficult sends having been announced from 98 companies in the fourth quarter so far. today, hca, dish network, cato

joining the list. jim iuorio is a cnbc contributor. >> i've been looking at this from every ang toll fiangle to find a tradable sort of angle. here's the one possibility that i have. even regular dividend payers sometimes when the x difficult tend date comes they adjust to the downside more so than the dividend even was. to me it seems like it is almost worth being short these special dividend payers into the x dividend day. i'm not because it seems dangerous to me. >> jim, we'll be back with you shortly. now to bertha coombs with a "market flash." >> watching shares of aol. the "wall street journal" naming some unnamed sources say that its chief marketing officer will

be parting ways with the company. what's interesting, she was just named to that position back on july 17th of this year. she would be the fourth marketing -- top marketing aol communications to leave the post this year. sue? >> thank you, bertha. positive news on the home front when it comes to foreclosure foreclosures. which states are doing the best and how might the fiscal cliff hurt that recovery? plus we may have an airline deal on the horizon. delta looking to take a massive stake in industry pioneer virgin atlantic. what would that mean for delta and the rest? ♪ [ female announcer ] today, it's not just about who lives in the white house, it's about who lives in the yellow house, the green, and the apartment house, too.

today we not only honor the oval office, but we honor the cubicle, and the home office as well. because today it's about all of us. and no matter who you are, you're the commander-in-chief of your own life. ♪ you're the commander-in-chief of your own life. if we want to improve our schools... ... what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ... nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this.

that makes watching tv even better. if your tv were a hot dog, zeebox would be some sort of fancy, french mustard. just like adding fancy mustard to a hotdog makes you go "woah!," zeebox adds video, info, and playalongs to spice up your favorite shows. download zeebox free and say "woah" every time you watch tv.

we have a big week for the bond market. we have key auctions all throughout the week. then the big jobs report on friday. you might expect some volatility. rick san tell sli tratelli is t action at the cme. >> the fed meeting most likely will show us that operation oliver twist turns into operation i love treasuries. probably more treasury buying. if you look at a two-day -- i picked two-days because i think it sends the point home -- we've escalated up just a bit on yields you see on right side of the chart.

remember we had a three-year week ism headline, three year weak in terms of the employment index right before we get to two jobs reports wednesday and friday. if you look at the bund you can see the same pattern, maybe more pronounced. winner of the day in terms of watching technicals is the euro currency. it's had a great two-day run. when you open it up to a chart going back to the 23rd of october you can see we haven't been above 1.30% since then. this will unleash a lot of both short covering and option related buying. look for a little tail wind, so say traders. tyler, back to you. to the housing economy now. construction spending rising by the most in five months, up 1.4% in october. as it stands, home building is expected to add to economic growth this year for the first time since 2005. we also have new dethat on the state of foreclosure in america. diana olick has it all for us from washington. >> tyler, numbers are coming

down. in this case that's a good thing. 58,000 completed foreclosures in october according to core logic, down 25% from september which did see a big upward revision but still we're down 17% from a year ago. although we're still running at three times the historical norms. got to keep it real, people. anyway, california, florida, michigan, georgia and texas made up half of the foreclosures. the rest are new york, new jersey, illinois and nevada. four out of five are judicial states where you need a judge to sign off on each foreclosure. nevada seeing a big slowdown due to new laws there protecting borrowers. expect to see more of a drop in foreclosures in the coming months. both fannie mae and freddie mac announcing their usual foreclosure moratorium for the holidays. most banks halt foreclosures for

90 days in new york and new jersey. clear capital will release a report tomorrow showing home price gains weakening rather dramatically in november and they're warning all bets are off on housing improvements should we go over the fiscal cliff. speaking of housing, would you buy a mortgage from walmart? or how about a mortgage from an onlime payment providing like paypal? results after new survey, what does it mean for banks and consumers in the next half-hour. a deal may be in the works involving two of the best known airlines. delta is in talks to buy 49% of virgin atlantic from it current shareholder which is singapore airlines. cnbc's phil lebeau is back with us from chicago again. phil, what's in it for delta? is it root structure? >> it is the root structure and gates at heathrow. singapore airlines wants to sell its stake in virgin atlantic. it has struggled for some time. they own 49% of virgin aen lick.

the possible price here -- this is just an estimate at this point according to industry sources -- $1.1 billion to $1.3 billion. who owns the other 51%? we all know who it is. richard branson. for a couple of years now he has been weighing the future of virgin atlantic. this is an airline that despite all the publicity, it has struggled to really make a huge dent in terms of the bottom line for those shareholders. virgin atlantic has not made money for singapore airlines. that's why they want out. they want to focus more on asian reps. >> what are the odds it goes through? >> maybe. good chance that the 49% stake could be sold if delta could swing a deal because it wants these gates at heathrow. they might want to work with their partners over in europe. at the day of the day, this is all about increasing its exposure in the united king come as well as increasing its weaknesses in europe.

it is the most lucrative airport market in the world. those gates there are the key to driving revenue. if delta can get a hold of them then it will really drive greater revenue over there. >> phil, thanks. shares of dell having their best day of the year on the back of an upgrade by goldman sachs. a call out on research in motion an verizon as well. but are they the right call? we'll analyze the analysts straight ahead. plus a cnbc exclusive you don't want to miss. david faber speaking with charter communications ceo thomas rutledge. his first interview since take over that top job. "power lunch" back in two. having you ship my gifts couldn't be easier.

well, having a ton of locations doesn't hurt.

and a santa to boot! [ chuckles ] right, baby. oh, sir. that is a customer. oh...sorry about that. [ male announcer ] break from the holiday stress. fedex office. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan. tdd#: 1-800-345-2550 with the new global account from schwab, tdd#: 1-800-345-2550 i hunt down opportunities around the world tdd#: 1-800-345-2550 as if i'm right there. tdd#: 1-800-345-2550 and i'm in total control because i can trade tdd#: 1-800-345-2550 directly online in 12 markets in their local currencies. tdd#: 1-800-345-2550 i use their global research to get an edge. tdd#: 1-800-345-2550 their equity ratings show me how schwab tdd#: 1-800-345-2550 rates specific foreign stocks tdd#: 1-800-345-2550 based on things like fundamentals, momentum and risk. tdd#: 1-800-345-2550 and i also have access to independent tdd#: 1-800-345-2550 firms like ned davis research tdd#: 1-800-345-2550 and economist intelligence unit. tdd#: 1-800-345-2550 plus, i can talk to their global specialists 24/7. tdd#: 1-800-345-2550 and trade in my global account commission-free

tdd#: 1-800-345-2550 through march 2013. tdd#: 1-800-345-2550 best part... no jet lag. tdd#: 1-800-345-2550 call 1-800-790-3801 tdd#: 1-800-345-2550 and a global specialist tdd#: 1-800-345-2550 will help you get started today. welcome back to "power lunch." i'm bertha coombs with a "market flash." jcpenney, outlook cut on the stock and also cutting its price target from $20 to $17. the analyst says even if jcpenney doesn't report same-store sales, he expects a whopping 32% drop in same-story sales for the fourth quarter after posting a 20% drop in the third quarter. let's analyze this with jim iuorio, director at tjm.

canaccore. is it time to get out? >> i disagree. for years rim's been dead money. we thought people would switch to the cooler cell phones. the fact is they haven't. they must have a loyal customer base that the market didn't anticipate. that makes sense to me. some people still stayed. they haven't switched by now, what's going to make them switch in we're traders and analyst so we believe in fluidity. we switch all the time. maybe some people don't. they got a new phone coming out january 30th. unless we have reason to believe that's a dud, i think rim could be back in the picture a little bit longer. >> nomura upgrading verizon to buy from neutral. that's a big move. they're raising their price tart to 50 from 49. imagine that! that is a radical call! >> gutsy call. >> the firm says verizon is positioned for continued dominance. the stock 16% up over the year. >> remember why they got hammered here. this was people trying to take

capital gains taxes in 2012. they owned the dividend payers. that seems to have dissipated. it seems to me it should take its place back again. it is a good company and they have a competitive edge. so i like the call. >> goldman sachs upgrading dell to buy from sell. that's a nice little rhyme there. the firm says they are finding deep value amid all the pessimism. the stock having its best day this year. buy dell at $10? >> i've been hammered on hewlett-packard. so i may. what i loved about the call is when they said the secular bear case has been consensus. that means everyone's rushed to the same side of the bode. they have a cash position that protects you on the downside. if it stays above 10% and settles there -- >> it is down almost 36% for the year. maybe the bear case has become the consensus. thanks, jim. we have a lot coming up, including how pension fund investors are positioning themselves for the fiscal cliff.

we're going to talk to mike o'brien. he helps manage $700 billion at jpmorgan. so you know he's given this a lot of thought. plus, it is his first interview since taking over the top spot. chartser communications ceo thomas rutledge joins us speaking exclusively with david faber. next on "power lunch." ♪ ♪ [ male announcer ] 'tis the season to discover the kid in all of us. the memories that last, start with the gifts that last. ♪ enjoy free shipping and great values on your holiday shopping from l.l.bean.

a passionate belief, and the foundation on which merrill lynch has been built. today, our financial advisors lead from a new position of strength. together with bank of america, they have access to more resources than ever before. a steadfast commitment to help you achieve your financial goals in life. that's the power of the right advisor. that's merrill lynch.

right now the dow jones industrial average is off about 30 points on the trading session. there is a little nervousness ahead of the president taking to twitter at 2:00 p.m. to talk about the progress or perhaps better said, lack thereof in the negotiations to avert the fiscal cliff. that's also affecting the metals markets and gold prices are starting to close just as we speak. it's been an active session. sharon epperson is track being the action at the nymex for us. how does it look going into the close, sharon? >> an active session for sure. traders are really active in the -- with a lot of call action in the trading pits as well. we are looking at goal prices settling in the next couple of minutes around $1,720 an ounce. that would be up $7. we're seeing the fact that we're seeing a little weakness in the dollar as well as new money and the beginning of the new month helping disperse momentum in the

gold trade. so far this year gold has done well, up about 10% year to date. that's something that has caused a lot of retail investors to want to be in the gold market particular lay in the goticparp market. also some significant interest in gold coins. other metals doing well, so far this year platinum has done well, it's up 15% or so year to date. part of that has been due to the interest in clean diesel cars. those auto converters that are used and platinum used for those auto converters in diesel cars here in the u.s. that's certainly helping that market. in terms of the etf action across the board though, silver definitely the best performing commodity so far this year, up more than 20%. again keep your eye on the etf market at the end of the year as a lot of retail investors want to put money to work. back to you. back to bob pisani here on the nyse floor. we're down 30 points.

couple of the guys came by the post and said let's see what happens at 2:00. the president is going to take to twitter. if you listen to the sunday talk shows it sounds like there is no movement whatsoever. >> yet it's not killing the markets. it's surprising a lot of people, i think. we're not moving to the downside that dramatically. about even on the advance-decline line. the dow jones industrial average was at a multi-week high this morning as we opened up. we were down 12,500 two weeks ago. so not bad sideways today. not bad at all. i think the concern is the ism number weakened the market baltimore than the fiscal cliff propped up by greece. tech has not had a very good run recently. up today, dell got an upgrade at goldman. sharon talked about gold. it may be that gold has not done too bad this year but gold stocks are not outperforming. again today they are on the

downside. this has been a year of buying gold, not so much buying gold stocks. really, you go back to 2004 when you could buy the gld for the first time, then you could suddenly have an alternative to owning gold stocks. before that, that was the only way you got the gold. to the nasdaq now. seema mody is there folth big movers. >> we're flat on the day. one unusual mover, deckers outdoor is the maker of ugg boots. stern upgrading from buy to neutral citing new product offerings could help the company next year. the stock up 8%. apple also a bit higher by .6%. the company announced this morning thatle iphone phone will be available in south korea on december 7th with more than 50 additional countries being added in december including brazil, russia and taiwan. trying to capitalize on the growing number of smartphone users in emerging markets.

dell, best performing stock in the nasdaq. getting the strong upgrade over at goldman sachs. netflix up 4%. back to you. fiscal cliff looming of course. corporate boards at the world's largest pensions and sovereign wealth funds have very hard decisions to make about risk and asset allocation. how do you generate returns and manage volatility in this kind of environment where there's so much you can't control? global head of institutional clients with jpmorgan asset management, welcome. i'm going to ask something that may be counter intuitive to a lot of people. maybe not to you. it seems to me your clients, institutions, pensions, endowments, are tax exempt. they don't have to worry quite as much it would seem to me about avoiding dividend taxes or capital gains taxes as ordinary

individuals. am i right about that or wrong? >> yes and no. the point being if the fiscal cliff you look at china, eurozone, it is all coming together to create an environment of total uncertainty for a lot of the biggest investors in the world. pension funds in the u.s. are trying to manage the volatility of the funding levels, generating return. think of where the average u.s. pension fund is trying to again rate a return from 6.5% to 8%. >> it's not so much that they're concerned about a looming tax hike that might affect their portfolios as it is about the uncertainty that the cliff represents, that chinese economy represents, and that europe represents. >> totally. so they have two decisions. on the risk hedging they have to look where yield is going worldwide. that's the price of ensuring their liabilities. at the same time diversification is the other avenue, generating

return. rather than awarding historically high allocations toward equities, move towards alternatives. >> not necessarily bonds -- >> i would say absolutely. on bonds it could be high yield investment grade bonds. it could be emerging market debt but it is more about diversifying away from the traditional allocation to i would say developed market equities. >> let me ask a question about an awful lot of pension funds that have obligations that they have to meet. they have built in assumptions about the returns they need, given the demographics of their contributors and the demographics of the people they are paying benefits to. i bet that most of them have come up short, that their assumptions have not been met. what are they doing to try and get back so that they're not so radically underfunded? >> first thing, you go back over the last ten years. equities have not outperformed bonds. traditionally they'd expect equities to outperform bonds by 15% over a 10, 15-year period.

they're going into emerging markets, chasing global growth. looking at credit, high yield, emerging market debt and private credit. the fact is they are reallocating away from domestic equities. if you look at the most conservative investors in the world, which would be the japanese pension funds, a survey we run for a number of years indicates that 40% of japanese pension funds for the first time are now going to basically reduce allocation to domestic japanese equities and allocate to alternatives. they define that as real estate, hedge funds and private equity. that shift is happening with that return in mind. >> so i hear you saying that what's so different wiabout you business today is the range of investments you have to know about, that your clients are interested in and that's where they're get iting in. >> if i had to define that more on characteristics, it is about cash flow. yield and cash flow.

we're going back to an environment whereas the investor, the pension funds and insurance companies are looking at investments and looking for the fundamental characteristics of underlying cash flows. >> what are your assumptions about 2013? is it going to be a good year for investors like you? is the fiscal cliff going to derail the year? what's your best bet prediction? >> i think the best bet is first of all on the risk hedging side for pension funds, they'll build plans but they'll unlikely start to move. we estimate in the next ten years in the u.s. alone you could have $1 trillion move into bonds for purposes of dampening that volatility. 2013 we are going to see a consistent disinvestment from developed equities and bought in the uk, europe, japan and the u.s. >> i got one bet for the new year. mike o'brien is going to pick the irish over alabama in the national championship game. >> all day, every day. >> mike o'brien of jpmorgan, thanks very much.

don't miss david faber and his exclusive cnbc interview with charter communications chief executive officer, thomas rutledge. it will be mr. rutledge's first sitdown since taking on that role in february. shares of charter gaining more than 30 prgs ov% over a one-yea.

when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students.

rhetoric heating up over the fiscal cliff. will we see a deal by christmas? that was our poll question. 28% said yes. both sides know they need to get it done. 38% said no. neither side will blink, over the cliff we go. 34% said sure. the deal's going to be delivered by santa and his reindeer. there you go. let's see what's coming up on "street signs." >> the cynics out there amongst our viewership. coming up top of this hour, it feels like a james bond movie in our own backyard. we're going to look at america's growing spy network. what is it going to cost and it

will be effective? also, fast food work is being galvanized with recent waubouts like walmart. protests in new york city saying they want a bigger slice of the pie. did you see the 60 minutes investigation on chain hma? why our guest has put the stock at a sell. 2:00 to 3:00 p.m. eastern on "street signs." ubs is loeldi inholding its annual media conference in new york today. david faber has the ceo from charter communications. his first interview from taking the top spot. >> we are here at the ubs media conference. with a guest in the media industry whom i have never interviewed on camera. tom rutledge, ceo of charter communications. 5 million subscribers spread across the country but certainly st. louis still the hub. nice to have you. >> thank you, david. glad to be here. >> you've been ceo of this company for most of this year,

let's call it. ten months or so. it's different than cablevision which i ran as coo, the cable part of it, for many years. much more spread out. much lower average revenue per user. how confident are you that you can tackle something that even geographically is very different than what you did at cablevision, not to mention get people to spend more for their broadband and for the cable? >> it is a cable company and has the same physical assets. they're just in a lot more places. charter has 200,000 miles of street service, meaning physical infrastructure in front of that many miles of streets and 12 million homes. so the challenge is to provide a good product, a good service across that footprint and to put value in the home and market your way into the home and stay there and have a long-term relationship with the customer. the assets are fabulous. the ability to provide a great video product, a great data

product and great voice product and put them together in a package that saves the customer money and gives them a better product individually that they could get from any other provider, then combined as a whole into a package that is a better value is how you make money and how generate more revenue per customer. >> another way to make money of course is also to invest. which is something you are doing. your last conference call, you seemed to increase or at least analysts were questioning you a lot about increases in capital expenditure because numbers weren't quite what they thought. why are you going down that road at this point? >> well, the key to our investment is to put better products in the house. we've raised the speed of our internet service to the slowest speed we now provide increme incrementally is 30 mega bits. we've taken our video product and gone all digital, starting adding lots of hd channels. we've taken our voiz product and fully provisioned it. so our capital budget is a

function of the kinds of products we're putting into homes but it is also a function of what we get to charge. when you look at the investment, it is success-based investment, based on customer growth and it is based on better products with higher revenue per customer that are going to have longer customer lives. >> what metrics would you look at to say this is working and i feel like this is the path, the strategy that can work? in the last quarter you lost 73,000 video customers even though you added 69,000 broadband customers. >> that's right. i think ultimately we want to add video customers. our customer relationship are increasing. our data product is xwrgrowing rapidly. our voice product is growing rapidly. you want to see the number of products per home growing and the monthly recurring revenue start to rise. >> how many years? >> i think it starts coming up relatively quickly. we've initiated a whole series of product changes this year,

changed the way we price and pack animal and how these products go together. as a result of that we had higher operating expenses as we changed our marketing strategy and the way our initial pricing works. but through time as we add customers you'll see that our customers are buying more services from us and that the revenue on orange per customer's growing. then ultimately the average ref into you of the whole business starts to grow. >> to those who would say, rutledge, you were a great operator at cablevision, but it was much easier. you had most of your subs in a very tight geographical place. this is a different animal. how do you answer those people? i know it is a fair question. >> some say if you can make it in new york, you can make it anywhere. there's some truth to that. new york has advantages and disadvantages. it is a tough market. people are tough. and they expect high quality operations and we were able to do that. the difference is significant. it's harder to market charter because it is more spread out.

so there are inefficiencies in that. on the other hand, the network is fully capable and it has tremendous up side. the fact is that it's an abused company, went through a bankruptcy. it didn't make all the right investments in terms of customer premises equipment. we're now making those investments. the quality of the products that we can provide are great. they're better than their competitors. competitive environment is different. in fact more favorable. so i think when you net all that out there's growth opportunities. >> of course in the last conference call you talked about the best companies in your industry generate as much as $450 million of cash flow or ev ebita. is it reasonable to expect you could get to that high a number? >> you don't have to if you create value. $450,000 per home past her year of ebita coming out of the best cable operators and charter is actually at the lowest end of

that scale. so the up-front or up side that we have is bigger than anyone else's. but i think the whole industry has room to grow so i don't -- >> you still think the industry -- even though video subs are not growing anymore. zp video subs are not growing but they're stabilizing. data and voice is growing and i think video can grow again. the industry was stuck in an analog world and had to make a transition and it is not fully complete yet. but as these cable companies become all digital, a lot of spectrum is freed up so the capacity of the networks is much greater once they're all digital than what they were. these are two-way interactive platforms. satellite is still the only one-way broadcast platform. they have data services that can go way faster than they can go today and they have integrated voice communications products with video and with data that work in ways that no other provider can make. so they're really powerful assets when they're freed up and they haven't been marketed and

operated -- >> always glad to hear that given our ownership as well. finally, breslin communications you bought it at cablevision. it's now for sale. >> it is. >> you liked it then. do you still like it? would you charter consider buying it? >> how could i say otherwise? i already wanted to buy them once and did. i think they're in nice shape as a result of the things we did to them. but charter's opportunity isn't to make an acquisition the size of breslin. the opportunity is to grow itself internally, organically. there's 12 million passings. we have 4 million video customers and 5 million customer relationships. so that's 7 million non-customer relationships is massive relative to the size. they are a nice operation they were good for cablevision and it may fit with charter but it isn't necessarily for charter to be successful. >> we'll leave it there, mr. rutledge. glad you to join us.

tom rutledge, ceo of charter communications. whether you love it or hate it, it is hard to imagine a world without -- text messaging. hbd, lol, omg and the list of acronyms goes on and on and on. 20 years ago today the first text message ever was sent. we'll discuss what it's done to us all next. [ male announcer ] when this hotel added aflac to provide a better benefits package... oahhh! [ male announcer ] it made a big splash with the employees. [ duck yelling ] [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. ♪ ha ha! you know, one job or the other. the moment i could access the retirement plan, i just became firm about it -- "i'm done. i'm out of here." you know, it's like it just hits you fast. you know, you start thinking

about what's really important here. ♪ ♪ five days later, i had a massive heart attack. bayer aspirin was the first thing the emts gave me. now, i'm on a bayer aspirin regimen. [ male announcer ] be sure to talk to your doctor before you begin an aspirin regimen. [ woman ] learn from my story.

prince william and wife kate are expecting. the duchess of cambridge currently in a london hospital. she's having a little morning sickness. william, second in line to the throne after his father prince charles. the couple's first born would eventually would become a monarch. congratulations to will and kate. sue? >> indeed. we certainly hope she's feeling better very soon. time once again for the power rundown with john carney and bob pisani. good to see you guys. first up, a new survey finds 1

in 3 consumers would consider taking a mortgage from walmart over traditional banks despite the fact that walmart doesn't offer mortgages yet. it seems that there's just this distrust of banks, banks have such tight lending standards right now. the consumer doesn't feel like they get a fair break. >> i think people hate banks but it goes beyond that. walmart is actually a really nice place to shop. people feel comfortable walking in there. they don't feel comfortable walking in to their banks. getting a bank loan and a mortgage is a hassle. people think that if walmart was able to offer me the kind of service they do when i buy stuff from them as to when i was getting a mortgage, i would love that. >> i think the survey is totally wrong. my experience is 99 out of 100 people looking for a mortgage, sue, would take one from whoever gave it to them! your aunt matilda. disney world. ferris bueller! bruce springsteen. >> i really think that people enjoy their trips to places like

walmart a lot more than a bank. banks, as businesses, can do a lot better with customer service. >> on that note, cautionary tale for the financial institutions out there. 20 years ago today the first text message was sent to a mobile phone. two decades and six million messages later, texting has made phone companies billions of dollars and spawned a new lang of words like idk and lol and many, many more. but the problem is, guys, people don't talk to each other anymore. they just text. bob pisani, it makes me crazy. >> things have gone downhill. i'm glad the first message was merry christmas. at least that was pleasant. do you know what the second, third and fourth ones were? i have them! number two is buy the number one diet pill. the next one -- the best stock to buy now. the fourth message -- what's up. the free message was free testosterone supplements.

there's the list. >> oh, stop. >> in defense of the texting masses, i think it is brilliant. we're able to talk to each other a lot more than we used to be able to. we can tell people when we're going to be late, when we're going to be early. >> i agree with that! >> it's better than talking! it's communicating. >> it's better than talking? >> i agree with that. but people don't even look up anymore. they're always down like this. >> the average 15-year-old sends 195 texts a week. >> just look up every once in a while if you text or you're going to hurt yourself. disney's new fantasyland, the largest expansion in the magic kingdom's 41-year history opens this week with new interactive rides and attractions inspired by the animated classics but also like "the little mermaid" and beauty and the beast." john carney, your little ones are going to love it. >> i have never been to a disney theme park in my entire life. >> are you kidding snee. >> never in my life.

i asked my mother, what, did we hate disney? she says you guys just weren't that into it. i don't know if i'll ever go to one. >> you have to go. >> everyone says you will end up going. somehow i never went as a child so maybe i'll avoid it. >> they're wonderful, john. if you're an investor, don't o poo-poo the theme parks. theme parse are 30% of disney's overall revenue. it is number two. number one is the cable business for disney. that's about 30% as well. this is a gigantic moneymaker for disney. >> i'ven many times with my little ones. they love it. it is always a fantastic experience. >> you guys say to go, maybe we'll have to go. >> there's a great book i'll give you, john. coming up in the next hour, american spy games. u.s. plans to double the number of spies that are working around the world. see how much that's going to cost all of us on "street signs." back in a minute.

♪ [ male announcer ] 'tis the season to discover the kid in all of us. enjoy free shipping and great values on your holiday shopping from l.l. bean. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. well, having a ton of locations doesn't hurt. and a santa to boot! [ chuckles ] right, baby. oh, sir. that is a customer. oh...sorry about that. [ male announcer ] break from the holiday stress. fedex office.

in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. so why should our anniversary matter to you? because for 200 years, we've been helping ideas move from ambition to achievement. and the next great idea could be yours. ♪ olaf gets great rewards for his small business! pizza! [ garth ] olaf's small business earns 2% cash back on every purchase, every day! helium delivery. put it on my spark card! [ pop! ] [ garth ] why settle for less? great businesses deserve great rewards! awesome!!! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet?

is what drives us to broadcast the world's biggest events in 3d, or live to your seat high above the atlantic ocean. it's what drives us to create eco-friendly race tracks, batteries that power tomorrow's cars, nearly indestructible laptops, and the sustainable smart towns of the future. at panasonic, we're driven to make what matters most better. just another way we're engineering a better world for you. let's bring in jim iuorio, cnbc contributor with us all week long. you have gone to the remainder bin for some of your stocks here